When less is more. Why retailers should cut choices to boost sales.
If you’re a regular shopper like us and do most of your buying from online retailers, you probably ask yourself….people probably like having a lot of choices. Why else would there be hundreds of brands selling the same thing – soap, shampoo, cereal, toothpaste, and you name it. A similar scenario takes place in supermarkets. You are overwhelmed with which detergent powder you should buy.
Actually, it’s been known for some time that too many choices can reduce consumer purchases.
Columbia University conducted a consumer behavior study where consumers were given a choice of either 6 or 24 gourmet jams in a high-end grocery store. For the group that was given a wider choice of 24 jams, 60% of customers stopped and checked it out, whereas, for the group that had choices of 6 jams, only 40% checked out the limited selection. The interesting part was that 30% of customers that were presented with the limited choice converted to customers versus only 3% of customers who were presented with a wide variety. The small selection sold 10 times as much as the larger assortment.
Further research suggests that having to make choices tires out the brain and can make subsequent decisions more difficult to make.
A study made by Ned Augenblick and Scott Nicholson of Stanford University looked at voting patterns in a California county. They found that the lower an item was on the ballot, the less likely voters would choose that item. Voters would either use a shortcut, like choosing the first item or an easier way out rather than go through all the items on the ballot.
We have experienced similar levels of fatigue when completing online surveys. We start paying attention to the questions and choices at the beginning of the survey but as the question count increases, our attention wanes off.
Many brands have started to cut off different brands of the same product. Walmart dropped two brands of peanut butter and found sales in the category went up. Similarly, Procter & Gamble cut the range of skincare products at a retailer, and sales of the remaining products increased.
The trick for retailers is finding the right number of choices for their products. Offer enough choices so that a customer can find a satisficing product but not so many that they will be confused and eventually decides not to buy anything.
Customer guidance can be a great help. A bit of effort to help the customer decide can go a long way toward slicing through the confusion and frustration caused by too many choices. If a salesman can assist customers by asking them for preferences and making a recommendation, that would really help customers.
Even self-service with guidance in the form of labels, instructions, ratings, etc can be of great help too. Wine shops deal with this complication of options by offering expert advice to their customers. In contrast, many supermarket wine sections offer as large a selection as a wine shop but have no trained staff to assist customers. Smart retailers guide choices by labeling a few wines with prominent descriptions and expert ratings to help customers decide.
Online retailers can offer a greater selection of products compared to brick-and-mortar stores. They can use all kinds of techniques to make choosing easier: recommendation engines, sorting and ranking features, ratings and reviews, suggestions of similar products, and so forth. Amazon has a product list that numbers in the millions, but it still manages to guide its customers to appropriate choices.
Choices that appear similar and don’t offer the customers any cues or shortcuts in making a decision can kill sales. More choice isn’t always good and can actually reduce sales.
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